MANILA May 27 (Reuters) - Major iron ore miners from
Australia and Brazil are unlikely to create a cartel and agree
on output cuts to shore up prices, with weakening demand
expected to intensify competition, Goldman Sachs said.

"Efforts to support prices via voluntary production cuts
would be counter-productive. In our view, competition in the
iron ore market can only intensify; we expect the war of
attrition will continue while prices gradually decline towards
our $40/tonne forecast by 2017," Goldman analyst Christian
Lelong said in a report.

Iron ore fell to a decade-low of $46.70 a tonne in April and
even at just above $60 currently, the price is less than half of
last year's peak.

Top iron ore producers Vale of Brazil plus Rio
Tinto and BHP Billiton of Australia have
ramped up output even as demand cooled in top consumer China,
sending prices tumbling and leaving smaller, high-cost producers
struggling to survive.

An effective cartel implies voluntary production cuts, said
Lelong, and "the required coordination among dominant producers
with different incentives would be more difficult to achieve
among three companies".

"For instance, the offer of $4 billion in financing from
Chinese lenders for (its) expansion arguably puts Vale in
a position to ramp up growth at a time when Rio Tinto and BHP
Billiton are reducing their capital budgets," he said.

Vale secured the credit line from Industrial and Commercial
Bank of China Ltd during Chinese Premier Li Keqiang's recent
visit to Brazil.
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